The FCC’s policy of excluding assignments or transfers of control of TV station licenses with joint sales agreements (JSAs) from statutory grandfathering requirements, and the agency’s recent proposal to make cable set-top box data available to third-party programmers and app developers emerged as prime topics of discussion during an FCC budget hearing conducted Tuesday before the House Appropriations Committee.

FCC Chairman Tom Wheeler testified at Tuesday’s hearing alongside FCC Commissioner Ajit Pai, who complained to lawmakers that one of the top issues impacting the national market for cable set-top boxes and navigation devices is the notion that the FCC has had “a highly intrusive set of regulations to create the marketplace it wanted.” Hinting agreement with Pai, Rep. Kevin Yoder (R-KS) related his lack of understanding about how the FCC’s plan to impose a new technological mandate on cable operators could benefit the cable industry or their subscribers. In reply, Wheeler explained that Congress had provided the FCC with a “clear cut, black letter mandate” two decades ago to require open access to cable set-top box technology that, in turn, could spur a competitive market in navigation devices. Wheeler also lamented that 99% of today’s cable consumers have no choice in set-top boxes or apps and that the information sent upstream by multichannel video program distributors (MVPDs) “only talks to a device that they control.” The FCC Chairman thus concluded that: “we’re saying open that up so they can talk to other devices just like your smart TV talks to Netflix or Hulu and allow for that kind of openness so the consumer has a choice.” As he emphasized that the FCC has yet to vote on the proposed rules, Wheeler added that, if any stakeholders are concerned about “holes in the proposal,” then “we would want to hear from them.” 

With respect to JSAs, Wheeler advised the panel that a rider attached to the Consolidated Appropriations Act of 2016 (CCA), which grandfathered JSAs in existence prior to the FCC’s March 2014 decision to classify JSAs as attributable ownership interests, could not be applied to assignments and transfers of broadcast television licenses. Charging that the FCC’s policy violates the CCA, twelve Senate members, including Democrats Chuck Schumer (NY) and Barbara Mikulksi (MD), and Republican Cory Gardner (CO), urged Wheeler in a letter last Friday to “eliminate any conditions imposed on previously-approved license transfers that require the termination of JSAs in existence before March 31, 2014” and “respect the statutory grandfather of JSAs when evaluating any assignments and license transfers in the future.” Referring to the Senate letter, Yoder asserted that, in enacting the JSA policy to address concerns about “bad actors” gaming the FCC’s ownership rules, the agency had “thrown the baby out with the bath water.” Wheeler maintained, however, that JSAs could not be conveyed during license assignments or transfers because the FCC deems such transactions to be the end of the existing license and the start of a new license. As such, Wheeler stressed: “the terms and conditions that were once ascribed to the previous license and the previous owner do not transfer.” As Wheeler noted that the FCC has applied this policy “across a vast array of cases” over the past 30 years, Pai recommended that Congress “be much more specific” in voicing its intent during the legislative process “to make sure this doesn’t happen again.”